Leasing at Prime

Discussion in 'Prime' started by ironpony, Jun 25, 2012.

  1. ironpony

    ironpony Road Train Member

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    I've been meaning to start this thread for some time. So here goes... this is about leasing at Prime. It works for me and many others. I know there are a lot of folks who will say negative things about leasing, about Prime, but this is not the place for it. There are lots of other threads to register your thoughts on the subject. If you want to deride leasing, please do it somewhere else!

    Scorcher21 posted some questions, so I'll start with that. If you have questions about how leasing at Prime works, this is the thread to do it at. I've been driving for over 5 years now, and am into my second year of a three year lease. It's working quite well for me, but I've run businesses before - both successfully and unsuccessfully. That's helped me immensely with this endeavor, unfortunately you learn the most from the failures - and earn the least! So if I can help you get started in this on a path that leads to success, that's where we want to go.
    Here goes...

    The standard lease contract is for three years. It's a "walk away" lease, so if its not working, you can turn your tractor in, settle up, and move on. Repair costs are deducted from your escrow accounts, and the ballance is sent to you. Prime doesn't try anything funny with the escrow funds like some other carriers do - OOIDA got nowhere with their lawsuit on this subject when they were suing every carrier in existance over this.

    There are a few previously leased tractors available most weeks. The week I took this one out there were four or five available, and the ballance of the bakers-dozen or so starting that week (including me) got new tractors. The previously used ones are leased on a short-term contract that is for the remainder of the three years from the original contract. You may be able to move into one that has as little as a couple of months to well over two years on it. Those machines went very quickly.

    I can only speak from my experience as a solo driver in the reefer division. My cash flow on the average is just over $1100 per week. That being said, I don't use that as my "take-home." The first thing everyone must understand is when you lease a tractor you are in fact starting a business. Treat it this way, and I believe (through my experience and that of other successful Prime lease operators) that you'll have your best chance of success.

    To start with you have to separate your personal and business financial life. Establish separate bank accounts, and use your business account only for business-related activities. Send your settlement funds in a direct deposit to this account, and only withdraw funds for business related purposes. Purchases of equipment for your business, cash fuel purchases, etc. One of your most important disbursements from this account is your salary. Make sure you pay yourself just the way an employer would, because YOU the driver are now an employee of YOU the chief executive officer. Transfer those funds out of the business account, and into the personal account. I also put $100 on my fuel card every week to cover expenses, and its also what I try to stick to in "mad money" on the road.

    Sit down with your SO, and figure out what you need to finance your life, and stick to it. My best advice is that while you're drawing up this budget, that you get as many bills paid off as possible. The less personal financial stress you have in your life before starting, the easier it is to make that salary cover everything else.

    Finally, make sure you have some funds in that business account to start with. I suggest a minimum of $3000. Why? Your cash flow from your settlement is going to vary from week to week depending on freight, how it pays, and those times when you spend a good part of the week driving, but the delivery (and your payment for it) fall into the next week because you're past payroll cutoff for the week. Then there's unforseen things like a breakdown. Breakdown pay will cover your fixed costs, the repairs will most likely be almost 100% covered by warranty, but you still have to feed yourself, pay for a motel room - not to mention that salary thing. Make sure you are not under-capitalized when you start. This is the reason why most new businesses across all industries fail in their first year - and we really don't want to be going there.

    We aren't paid by the mile. We get 72% of the linehaul revenue, FSC, and accessorial payments - in other words, there's a slug of money coming your way for each trip. Gross revenue is the game here. That being said, the way to optimize your net before taxes is to minimize your costs, and the low-hanging fruit is your fuel bill. There are two ways to minimize the fuel bill... get great fuel economy, and buy your fuel as cheaply as possible.

    My average miles over the course of the lease are 2347 per week. You really don't want to drive more than you have to while leasing for percentage pay. It goes against what most folks learn on the company-side of things, but that's the bottom line. More revenue, less miles is the key. BTW, I averaged over 2800 per week as a per-mile company driver for Prime.

    I feel we're treated very well - ask this question of the other guys who post here as well. First, the owner of our company, Robert Low, was driver no. 1. He's a single owner-operator who made good (don't we all want that?). Now that being said, he's also a businessman - and a successful one at that. They don't coddle you here - either you cut it or you're out. I am on a first name basis with my Fleet Manager (FM or dispatcher,) as I have been with all of my FMs. I make sure that relationship is on good terms, and want to keep it that way. These folks are your business partners, so having that personal touch in it is important. Remember I mentioned the owner of our outfit? You can speak with him any time you like - when he's in Springfield, he'll be at the Friday morning safety meeting (and he'll buy you breakfast) - and you can shoot some basketball with him that afternoon. There are no bullet-proof glass walls, or cyber locks. You do have to swipe your ID/fuel card for access, and display it in the terminals - that's a more recent thing due to the federal government wanting tightened security at transportation companies.

    On-time performance is critical at Prime. It's a selling point for our sales folks - and that my friends is how we survive. By beating the other guy with better service. Be on time ALWAYS, and there won't be any QualComm micromanagement. The last time that happened to me is when we got a new night person... she started with the wake-up call nonsense. Got her educated out of that, and things have been going quite smoothly since. Yeah, there are times that I'll be done with some hours left, and I get a load with a "do you think you can get there with the hours left?" But there's a reason for that... my business partner is trying to help maximize my revenue. Outside of keeping the left door shut, the only real alternative you have to working the revenue side of your business is being available. It happens, but its the not the rule.

    BTW, so you know... there are a system of fines and incentives that the FMs are subject to. They are paid a base salary which is not all that great, and a commission based on the success of their board. That means us. If we are successful (read that as $$$) they get paid well. If we're late, have tickets - they get fined. They also get fined for loosing drivers. It's to your dispatchers financial advantage to make sure we do well.

    We have a fuel-route macro (macro 27) the company guys must follow, but as an independant contrator, you're allowed to do your own routing and choose your own fuel stops. Macro 15 is the fastest routing, and also is set-up to do hazmat routing as well - they want you to follow that with hazmat loads.

    With a years experience I'd think you'd just move into your own tractor, and be off and running. If there would be any running with a trainer it would be minimal I'd guess - not a bad idea to pick up "Prime's way." The only way you'd be able to find out for sure is to talk to a recruiter.

    Well... I'm guessing at the answer to 6, so that puts me in the realm of not-recruiting! Solo reefer driver.

    You'd have to ask a recruiter that question... I really can't answer from what I keep track of. I run primarlily in the northeast. The revenue is good, and the trips are short. Remember, gross revenue is the game here - not miles. The fewer miles I run, the happier I am.

    We're almost always heavy 40k plus. I had a spike in my fuel economy graph I keep from last year... went way up. I kept trying to figure out where I screwed it up. It took awhile for me to remember a 800-ish mile load that only weighed 5000 lbs. Whoa! We do get some lighter loads, but the rule is heavy here. That's one of the reasons why everyone is complaining about "slow Prime trucks." We're almost always at or above 75,000 lbs GVW. The only way you can get great fuel economy is to run slow -and that's how you make your money here. Short runs, great fuel mileage.

    No problem! Feel free to post any other questions you have on this thread.​
     
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  3. MONT74

    MONT74 Heavy Load Member

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  4. da1

    da1 Road Train Member

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    great thread IP i have 2say i didnt intend to read all of tbat but it sucked me in i learned some things i didnt know very informational thnx.....even though i dont intend of leasing
     
  5. ironpony

    ironpony Road Train Member

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    It all depends on where you want to end up. A really good question is, "Why do I want to lease?"

    Yup, you can make more money if you go about it the right way. You can also loose your butt - and if you've got kids to support, you really need to be clear on what you're getting into.

    A lot of folks answer that with, "I want the freedom to choose where I go!" or "I want more hometime." If you want more hometime, you're likely going to get more on the company side. As for "freedom" - well, I don't have to put up with some of the rinky dink stuff the company guys do, but if you refuse a load, you go back to the bottom of the list for the area you're in. And yeah, I have refused loads, and I haven't been "punished" by sitting for days by doing that like what might happen at other carriers.

    So if you're thinking about leasing at Prime, think about why you want to do this. I've grown used to being my own boss over the years, so I like working for myself. I also like the challenge that's brought by making this leasing gig work well. Then I'm also looking at ending up with my own tractor in a couple of years.
     
    da1, Bigdubber, HillJack and 1 other person Thank this.
  6. gatorbaiter

    gatorbaiter Medium Load Member

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    IP great post. I decided to train during the summer. not for the money but because i realized i was lonely. none the less i am ready to run solo for a while. I really hope to meet you some day. For those wondering about lease vs company at prime i will say this. if you can run a business lease. if you want to run a business then run company for a while and learn then lease. most of the people I meet who are on the edge of leaving their lease is because they are in lease but act like it is a job. I can expand on this later but i typed enough..
     
  7. grumpygroundhog

    grumpygroundhog Light Load Member

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    Now, Now, can't I post the truth even if it hurts.. According to the Pony, if you can not make a lease work you are an idiot. Here is a snippet where it appears he speaks for prime management....."Managment is not into coddling idiots who cannot manage their business"
     
  8. ironpony

    ironpony Road Train Member

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    Please don't put words into my mouth. I'm the last one to claim that anyone can do this. You have to be smart about how you go about it, and I agree with Gator that if someone approaches leasing as if it were a job then they will have a difficult time of it.

    How many "employees" regularily check their settlements? If the money seems right there's no need to in most folks view. When you step up to being a lease operator, its imperative that you look at your settlements each week. First, there's more activity on the billing side of it, and you need to be aware of charges against your settlement for reefer fuel, equipment washing, any repairs you might have done. Second, there are reimbursements that you need to keep track of for many of those items - do they match up? Advances against your settlement need to be squared with what happened to the cash - too many people finance their lives on the road with advances, and then wonder why there's no money left in the settlement. Third, you need to reconcile the settlement against your overall financial activity.

    Reconciling your financial activity means you need to be looking at a profit and loss sheet at least monthly to determine the financial health of your business. Folks thinking of leasing and being successful at this must sign on to doing the basic financial chores that every small businessman does. Personally, I use a spreadsheet that I constructed, and enter just enough data from my settlements weekly to be able to see how my business is doing. You can use a software package like Peachtree, or any of the software products available on-line. The point is that unless you are inside of the financial "numbers" that define your business, then you don't know how you are doing, or if you are "making money."

    So groundhog, no - not "any idiot" in your parlance can make this work. If you're going to be stupid enough to put the business end on autopilot while your lead foot eats all of your profits, then you're going to be having problems from the git-go. So groundhog, what I mean by the phrase "Managment is not into coddling idiots who cannot manage their business" is that if you go to management and demand a change in FMs because you can't make any money, you should have already looked at your fuel bill. Charging down the highway at 65 mph in a vehicle weighing 79,000+ lbs is not conducive to great fuel economy, and that won't change until you slow down. If you aren't helping yourself, they aren't going to coddle you.
     
    Last edited: Jun 26, 2012
  9. otr48

    otr48 Bobtail Member

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    You brought up reefer fuel, who pays for that ? I was a company driver last year and I remember picking up trailers with hardly any fuel for a dead head and the first thing that guard at the gate would check... is the trailer clean and is the tank 3/4 or completely full. I am dropping of an empty to pick up a full trailer so who pays for that fuel ? There are people who slip in dirty, fuel less trailers and the next guy has to fix it.
     
  10. DragonTamerBrat

    DragonTamerBrat Road Train Member

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    I do know that you can Macro 52(?) to get the authorization to fill the reefer on Prime's dime. Other than that, I believe it's on the lease driver. (IP knows for sure, but that's what I got from reading the lease. Which I have done until I see its paragraphs in my sleep.)
     
  11. ironpony

    ironpony Road Train Member

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    When you pick up a trailer (empty or loaded) you have two hours to get the reefer tank filled. One can always go back and work out the details with their FM, but as long as you stick to that two hour window, Prime picks up the tab. After that, its on you - cost of doing business. You must submit receipts and send a macro 52 documenting it to get reimbursed. We also go after the shippers to provide a reefer fuel surcharge that is passed along to us - it isn't in all contracts, but sales works at getting it in there for us.

    My reefer fuel cost tends to run around 0.3 cpm for all miles after reefer fuel surcharge is deducted. Prime went to this system years ago instead of footing the entire bill; once you have some skin in the reefer fuel game, the amount of fuel burned goes way down. As far as the deadbeats are concerned, on the lease side if there isn't at least 3/4s in the tank when the next driver picks up the trailer, the full cost of the reefer fuel bill will appear on the previous driver's next settlement. Company drivers can get away with it for awhile, but I have heard there are instances that Prime has gone after them for the cost of filling a tank in the most egregious cases.

    They do take into consideration whether you actually ran a load in that trailer, or whether it was one that you picked up empty on a drop n' hook. For example, drop a trailer at say a Walmart, and grab an empty with below half a tank - something that's sat around for a couple of days or so with the reefer running. You immediately head to the next shipper with no time available to go out of route for reefer fuel, and no local stops around - drop it and pick up a loaded trailer. I've never been charged for reefer fuel that was burned at a receiver on a load that I wasn't connected with.
     
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